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tv   Closing Bell With Maria Bartiromo  CNBC  November 27, 2012 4:00pm-5:00pm EST

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so thank you. i'll see you later. going out near the lows of the session. first day back for congress, and they're having an impact on wall street. the dow down 91 points. stay tuned. a lot more to come on this second hour of the "closing bell." it's 4:00 p.m. on wall street. do you know where your money is? welcome to the "closing bell." bill griffeth rejoins us in a moment. here's how we're shaping up at end of the day. the dow jones industrial falling by 88 points. pretty much the lows of the session. 12,879, matching what we saw when harry reid began making comments about an hour and a half ago. the nasdaq lower by nearly nine points. the s&p lower by seven points. 1399, just below the 1400 level. why the late-day selloff? most on the street blaming these words out of washington about fiscal cliff. >> there's been little progress
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with the republicans, which is a disappointment to me. they've talked some happy talk about doing revenues, but we only have a couple weeks to get something done. so we have to get away from the happy talk and start talking about specific things. >> as we head into the fiscal cliff negotiations, my advice to the president would be seems like our friends on the other side are having some difficulty turning off the campaign. we need to sit down and work this matter out. >> behind closed doors. even with the fiscal cliff looming over the markets, our own jeff cox with says there's a growing bit of optimism about the outlook for next year. take a look at some of the predictions from some of the street's biggest names regarding the s&p 500 for next year. it's quite a chapg for morgan stanley, by the way, whose 2012 forecast was for the s&p to close at 1167 on december 31 of
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this year. >> wow. they're expecting a mega rally next year. >> he hates having to come up with a number for next year, but he's doing it anyway. you can see a lot of these guys are raising their expectations for next year. >> they're thinking 250 points for next year for the s&p 500. that's impressive. should you bank on these calls or is it time to be a contrarian? jeff cox joins us along with liz ann saunders of charles schwab. liz, what do you think about the s&p for the end of next year? you think these guys are crazy when they say 1600 by the end of next year? is it possible? >> i think anyone is crazy trying to index where the s&p is going to close a year from now. it's precisely why we don't do it. i'm not sure it's the best message for investors. that said, i think the seeds are there for a decent rally. i'm not quite so sure they've been sewn yet. we have to get past this thing we're all tired of talking
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about, which is the fiscal cliff. from a valuation perspective, eventually from a sentiment perspective, i think if the fundamental get passed from an economic standpoint, i think the market looks decent. >> jeff cox, what do you make of these brokerages coming out with higher numbers for next year when the expectation is even if we get a deal on the fiscal cliff, chances are we get a slower economy next year because of the higher taxes and cutting spending? >> i want to touch on something that liz just said. i have tried to get her to play along with this game. >> i gave up long ago. >> she always resists me when i try to pin her down on the number. i guess she's smart. as you mentioned, a fellow from morgan stanley coming out saying, look, i blew it. it's a pain for me. i don't want to do this. i think what they're banking on is this whole fiscal cliff thing, the europe thing. all of the head winds for the market are never going to see the worst case scenario. i think just kind of the picture is this muddle through going forward. i called up today and tried
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to -- i talked to some of the most bearish people i know. they're all just kind of saying, yeah, we're going to muddle through. the fiscal cliff is going it get resolved one way or the other. europe is going to get resolve one way or the other. i think this is one of -- >> steve, he brings up a good point. consumers are not worried about the fiscal cliff. intraday trading today shows investors are worried about the fiscal cliff. who's right? >> well, consumer confidence showed that consumers are excited about housing. i think that's the one small bright spot that we've all seen that people can take benefit of low interest rates to buy homes, to renovate their homes. i think that's a small shining spot. >> but the spirit of the question is, should we be worried about the fiscal cliff? are we making much ado about nothing? >> well, consumers should understand that out of the $610 billion possible impact of the
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cliff, $400 billion is coming right out of the consumers' pockets. i think the answer to your question is they should be concerned with it. they're not educated enough on it to understand that $400 billion comes directly from their pockets. >> don't go anywhere yet, folks. we have some breaking news. earnings out from your favorite company, herb. >> i've said all along this company cannot afford to print anything but a really great quarter. they didn't disappoint on that. in fact, the company came out with really strong sales. $947 million versus consensus of $902 million. nongap earnings of 64 cents versus 48 cents. i haven't checked out the impact of the buybacks on that. still an impressive number. they raised their guidance to a range of 264 to 274. this is the range of a year. all in all, just looking at the
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surface, strong quarter. gross margins are down a little bit. you also have a new ceo coming in. brian kelly from coca-cola coming in about a week. i'll be back with you a little later. >> thank you for the warning. as we said, green mountain up 16% right now. >> huge move in the after hours. >> liz, we all are tired talking about the fiscal cliff, but that has to factor into the outlook for next year, right? >> oh, yeah. i believe the market is completely at the mercy of the cliff. the impact, at least on the business side, hasn't fully been felt. but they've been bracing for this for quite some time. steve is absolutely right in talking about the average consumer. they're just learning about this whole concept. they're not even sure they understand the ingredients to it. i don't know they're whistling past the graveyard. they are focused on things that normally drive confidence, all of which look decent, which is a pullback in gasoline prices, the
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improvement in housing. there are fundamental reasons for the lift this confidence. it's just a question of whether businesses are too pessimistic or consumers are too optimistic. >> what advice are you giving to investors right now about what they should do given the uncertainty? >> keep your cards close to the vest. don't make any major trades in anticipation of what is going to happen. there are certainly things that individuals can do. we're telling them to sit down with their consultant, adviser. figure out if there's something that may make sense from a tax perspective. that part is very individual. other than that, don't try to trade around this. >> i think with the long-term viewer looking at this, it's just theater that doesn't matter a whole lot. by the time we get to the end of the road next year, this will be -- >> what i don't understand, though, is that everyone can admit that it's a knock on gdp whether it's income earners 250
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and below or above. it's 1.4 of gdp for the main income earners. it's 0.25 for the rich, for the 1%. either way, it's a knock on gdp. this is political theater. either extend them for all or why are we playing this game? >> well, we're pretending we care about debt for a couple of weeks to put this little show on. at the end of the day, we go on. bernanke is going to come on and make a speech, preaching to washington. he's still underwriting all of this debt. he's more worried about the fact that we retrench too much as far as spending goes rather than if we keep going with the debt. he's more worried about austerity than anything. >> oh, we've become such a cynical lot, haven't we? we've got it all figured out. >> took you long enough, bill. >> in parting, one last note. if there is just a patchwork, if there is just a quick fix to this issue, we already know we're going to get another
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downgrade. i don't believe -- >> but will that matter? we got a downgrade last year. >> prior to that downgrade, the market caved. the market was anticipate toir. >> it was europe. all right. thank you, steve. thank you, guys. >> hey, i'm wearing my pin. >> oh, good, liz. >> rise above, everybody. >> rise above. hello. so which stocks really dragged down this market today? jackie deangelis breaks down the winners and losers for us right not. >> good afternoon. the three major averages closing in the red today. ouer, take a look at this s board here. seagate one of the big stories we were following today. zion is a stock on the radar today. the u.s. treasury will sell and conduct auctions to tell warrant positions in the name. also, hpq, that saga continues after a request from the former autonomy ceo to acquisition details of accounting fraud.
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some pockets of strength today. we were led higher by monster beverage. just one of those names people love to trade. regulatory fears subsiding a bit in that name. also want to draw your attention to corning. that stock getting a pop. last but not least, best buy. positive speculation in this name relating to a bid from the company's founder sending the stock up more than 3%. michelle. >> thank you so much, jackie. all right. just 34 days to go before we go over the fiscal cliff. >> oh, boy. >> i want to call it the fc. can't we get an abbreviation? we're going to l.a. we're going to ec. we're going over the fc. >> sounds good. >> are shareholders best served by companies paying dividends now? someone who's going to join us says absolutely not. find out why. also, later, who would have thunk financial adviser tells
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you what you need to know. plus, let the lawsuits begin. hewlett-packard slapped with a lawsuit over its autonomy debacle. now companies are openly slamming each other. that sorted story coming up. [ male announcer ] how do you trade? with scottrader streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start. try our easy-to-use scottrader streaming quotes. it's another reason more investors are saying... [ all ] i'm with scottrade. sven gets great rewards for his small business! how does this thing work? oh, i like it! [ garth ] sven's small business earns 2% cash back on every purchase, every day! woo-hoo!!! so that's ten security gators, right? put them on my spark card!
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welcome back. mandy drury has some breaking news, i guess new developments on china's currency controversy. >> breaking news from the treasury department in their semiannual address to congress. they say that china's currency, which is the chinese yuan remains undervalued. they say at this time they cannot label china a currency manipulator. remember, this is a really hot button political issue. during the presidential campaign, challenger mitt romney said several times during that campaign that he would on day one basically name china a currency manipulator. obviously i spent many years covering the chinese yuan in asia. it's a dangerous thing to do. you name china a currency
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manipulator, they would somehow retaliate toward the united states. that's what we're seeing right now with the treasury department saying the currency is undervalued, but not labeling them a manipulator. >> they've obviously let the currency appreciate. there has been progress. maybe not enough for some people. >> it has moved higher. th for. all right. let's move on as the white house and congress begin the process of hammering out their differences over the fiscal cliff. a host of companies have been rushing to issue these special dividends or they pay them early to avoid higher taxes next year. so far this year companies with a market cap of more than $1 billion have issued 60 special dividends, and that's nearly double from what we saw in 2011 when only 35 companies issued special dividends. >> is this a wise thing for companies to do to spend this cash without knowing what the tax changes will actually be? carol roth is author of "the
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entrepreneur equation" and says it could be a bad move. jason says it's a rational hedge against uncertainty. jason, you think it's okay? >> i do because we know one thing for certain. taxes on dividends and capital gains are going to go up by at least the obamacare surcharge, which is 3.8%. that's at a minimum. it's very likely to move significantly higher. i'd say also, you don't want to put all your eggs in that basket, but it makes sense to reward shareholders that have been with you if you have the opportunity. >> but you, carol, are looking at dividend gifts in the mouth. >> i do. i feel like it's the new black. everybody has to have one, but are they really thinking it through? what a special dividend does is it says i don't have any better use for my capital. i'm not going to put it to work in mna. i have nothing else to do with this money other than give it
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back to you. even a share buyback is more tax efficient than a special dividend. from a signal standpoint, it's very concerning. >> that's true of dividends at all times, isn't it? if this was a dividend you were going to give anyway, why not move it up? >> if it's a dividend you're going to give anyway, part of your overall corporate finance planning, i can understand that. i think you have to look at the rash of special dividends. a lot of these companies have a lot of insiders. i feel like they're doing this as a financial planning maneuver for themselves, not necessarily for the long-term benefit of the shareholders. >> what about that, jason? >> it's their company. it seems to be -- again, it's a rational thing to do. i agree that it would be better if they were actually using the capital for hiring, for capital spending. unfortunately, you have a fiscal cliff. you have a regulatory cliff to a certain extent in that. only one-third of dodd-frank has been completed. i don't think the uncertainty,
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even after resolution of the cliff, is likely. i don't think it's going to end. >> look at what that does for 2013 then. it says that means we're going to have even slower growth. this is a one-time give back to the shareholder instead of investing in this something that can produce returns year over year. what does this mean for 2013? i say slow growth. >> maybe people are more likely to sell it next year. is that possible? >> potentially. i think you have to look at the specific company. obviously, some of the bigger companies that have a lot of cash on their balance sheet, if they're just using a small portion to give that dividend, maybe it's not so concerning. if they're wiping all their cash off their balance sheet, i'd be very concerned about that. >> and we're showing you a list of some of them. if you could go back to that previous list, my point is going to be you're not seeing any particular industry group. it's across sections there. las vegas sands and gaming. ethan allen in retail furniture.
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brown forman in the distillery. it is corporate america. it's not just one group doing this. i made the argument to you during the commercial break. it's good pr if nothing else. >> it's only good pr for the people who don't understand it. yes, i'm getting something back today. but if you look at it as a signal of what's going to happen, what it means for the future growth of the company, i don't think it's such good pr. >> maybe it's a signal about the economy. maybe they're saying they don't have the anything better to do with it. did you see what's happening with taxes likely? it's going to be maybe a tough economy. maybe they telling us this is the best -- and wouldn't you rather have it than blow it on some junky mna deal or hire when it would be a bad time to hire? >> about half of the returns from stocks since 1926 have come from dividends. it's not an insignificant part of the total return over a long period of time. listen, i don't know if companies are really fooling people anyway. if you have all the cash sitting on your balance sheet that's earning zero, that's not a
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particularly efficient use of the cash either. as a shareholder, i'd rather have the money. >> it's better than them doing something foolish with the money. if a company like apple were to announce a special dividend, i'd rather see them buy back the shares as a signal that stock is undervalued than return the capital back to me. >> there you are. that was a good discussion. appreciate that very much. always good to see you both. we'll take a break. when we come back, winter is coming and so is the fiscal cliff. there i said it again. the defense department's five biggest contractors have been raising cash holdings by a whopping 70% in the last quarter. should they be this worried? we're going to speak with a couple of defense analysts in the back half of the program. >> also, do house speaker john boehner's constituents think he's doing enough to avert the looming crisis? we're going to hear from chief washington correspondent john harwood who is just back from a trip from his home state of
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ohio. up next, though, fallout from last week's autonomy mess mounteding. hewlett-packard's ceo and former hp head all sued by a shareholder for alleged fraud. it's getting ugly out there. we're going to speak with a lawyer gearing up to represent other hp plaintiffs when we come back. [ male announcer ] if you suffer from heartburn 2 or more days a week,
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of autonomy, mike lynch, wrote an open letter to hewlett-packard saying -- and we're going to show you a portion. he wrote, can hp really state that no part of the $5 billion writedown they took was or should be attributed to hp's operational and financial mismanagement of autonomy since the acquisition? end quote. now, hp took that write down saying that $5 billion of the $8.5 billion it wrote down was because autonomy had inflated its numbers. hp quickly responded with its own statement to mr. lynch's letter. they said, in part, we look forward to hearing dr. lunch and other former autonomy employees answer questions under penalty of perjury. >> that mike lynch letter, it went on and on. we showed you a little tiny portion. looks like both sides are geared up for a big, big fight. to top it all off, there's a
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class ash actiction shareholder that's just been filed against hp. jake has not yet filed the suit. i know he wants to. he has spoken with potential plaintiffs and hp shareholders. why haven't you done it yet? >> well -- >> i'm assuming you're going to. what's the case going to be? >> the case, i think, is a solid one. first, you had hp buying autonomy based on phony potential statements, paying $10 billion. >> but they didn't know they were phoney. >> we're talking about hp. if anybody should know about accounting and computer business, it's them. they're high-priced lawyers, high-priced accountants. the shareholders rely on them. they did it before with eds. the profit margins are declining. they paid $13 billion for that company. i think that they're desperate to buy these software companies to prop up their deteriorating hardware businesses.
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so they got a big problem here. >> quentin, i can understand if the write down is $500 million. but $8.5 billion on an acquisition that was, what, $10 billion or $11 billion to begin with. where was the due diligence in all this? >> let's take it down to $5 billion because the other $3.8 billion on the thing were related to hp's stock price, which has done so badly. where they come up with that whopping big number is expectations around profit margins, expectations around future growth rates, expectations on what a product like this might do when it's put into hp's powerful marketing engine. now, what they said is turns out this stuff really doesn't work like advertised. wasn't told at the level advertised. didn't have these kind of profit margins at all. that's how we work it back and come up with this number. what's missing from this, though, and i think what jake needs to think about too, is he says there were these phony sales. nobody's seen any documents yet.
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i think we need to see those before we can with conclusively say -- >> it's gone nuclear, that night? if so, why? >> everybody opened up at derfcn two and skipped defcon one. >> they said they never knew this was coming out. >> that's not quite right. i had mike lynch saying he had a one-hour conversation in june supposedly about his severance that turned into these series of questions about these sales. he says he was blind sided. hp said, yeah, he was evasive, that's why we didn't talk to him again. now we have this face-off between these two sides. >> jake, are you alleging fraud, or is it simple incompetence? >> i believe they misled the shareholders about extent of their due diligence. if the short sellers picked up the accounting problem, if twhy
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couldn't hp? i think this is really just a pr campaign by them to blame other people, including the accountants, reporting it to the sec. this is not something hp should be doing. >> quentin, go ahead. >> you have kpmg, goldman sachs, deutsch bank, you have all these law firms and lawyers and investment banks who honed in on this deal and took a piece of it. they all got paid and none of them saw it either. so are you going to sue them? that's who companies hire to do this kind of stuff. >> i think they will be sued. we're taking a look at it, as are many other law firms. there are a lot of firms that get paid a lot of money to do the due diligence. i think they're all going to be held accountable. >> how do you answer that, quentin? >> if this does turn out to be the case, it is an utter scandal in the normal behavior of companies that get paid millions of dollars to sell these
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companies to other companies. >> but quentin, it was a roll-up, right? we've seen this kind of issue over and over again in financial history. once you're a roll-up, there's so much manipulation that can happen. >> well, that's true. >> in february of 2012, $30 a share. you're a pension fund, an individual investor. you're paying $30 a share. now it's $11 or $12. to me, it seems that was an overvalued company at the time. hp is going to be held accountable. they might be able to pass some of the blame on to the other folks. this isn't a $30 stock. >> this is true. now, that's the previous ceo and all those guys who got thrown out. >> they're going to be held responsible too. >> i think this is the full employment act for securities lawyers. >> that, i agree with. >> and he's really happy about that. quentin, could this have happened to any other company?
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i look at all of the debacles at hp. it just seems to me that this was created for this board. >> very much, but star crossed would be putting it mildly. >> we had an accountant here not long ago who said software accounting, booking revenue and accounting is very much art and not a science. basically saying the only thing stranger in accounting is hollywood accounting. so are we looking at a case of that as well? >> well, look, in summer i think what microsoft paid $1.2 billion for yamme, this facebook for companies. very little revenues. or a couple months ago, emc's subsidiary bought a company which had no revenues for $1.6 billion. they're always bought for what you think they'll do for you in
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the future. by definition, that's squishy. >> again, the shareholders depend on hp to do the right due diligence, that the stock price is sffair. i think they fell apart on all these deals. >> well, it's not over yet. thank you, gentlemen, for moving the ball forward. see you later. powerball fever is driving the jackpot up to a record $500 million. you heard me, $500 million. forget spending the winnings on fancy cars. our wealth editor has the game plan to make the most of the prize money coming up. also, is this a case of good hoarding? the nation's top defense contractors have been piling up cash as the year winds down and that fiscal cliff looms larger. we'll talk fiscal cliff defense on the other side of the break after this. you are a business pro. monarch of marketing analysis. with the ability to improve roi through seo
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the major defense contractors have been stocking up, and it's more than weapons stock peoples. they're hoarding cash right now. >> how much? take a look. at the end of september, their coffers had a combined $21 billion. $4 billion of that was added in
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the third quarter alone. the reason is nothing to do with wars overseas. everything to do with the battleground in washington over the fiscal cliff. >> so is this prudent action, and how should it affect how you invest in the industry? we're going to talk to these two gentlemen about that. they join us with their take on all this. howard, you think this is a pru prudent move. why? >> you want to balance your risks. >> it's very simple. they're worried the fiscal cliff is going to happen. or maybe there's all kinds of dramatic cuts because they don't get the fiscal cliff solved and suddenly they're having cuts in payments. they're hoarding cash because they fear they're going to lose a payment stream, right? is it that simple? >> not only that, the other part is you want to make sure you can pay your suppliers and you can manage your receivables. >> patrick, what do you think? good idea, bad idea?
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>> i think it's a very good idea, as well. i agree with howard at this point. they can really do one of three things, or two of three things. they can invest organically to grow organically. they could also make acquisitions, but there's risk with that. or they can build up cash on the balance sheet and go back and buy a lot of stock and raise the dividends. if you look at what they've done over the last two years, that's clearly what they've done. these stocks have grinded higher. i think it's a very good strategy. >> why do you think they've grinded higher, patrick, considering that it doesn't matter, i think, what happens with the fiscal cliff. defense spending is going to go down regardless, isn't it? >> i think it's going to go down. first of all, expectations were very low. we've had a very, very nice run off the bottom here over the last 18 months. we've outperformed by about 320 basis points on a year over year basis. so the performance has certainly been there. i think consensus expectations probably got a little bit too low. at end of the day, these large cap prime contractors are in very, very good position, in my
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opinion, to weather the storm of sequestration. defense budgets come down over the next ten years, but it's probably by about $25 billion per year. i think that's something these companies can weather. they'll generate a lot of cash. i think the stocks will do well. >> howard, i get the prudence factor. if i'm an investor, do i invest in a company that's sandbagging and circling the wagons? i smell fear. >> well, you want to sandbag in front of a flood, absolutely. we discovered that the other day. there's international business to be had. the companies are doing a good job of channelling their efforts overseas. over 25% of their business is international. that's not going to go away. so some of this cash comes from international sales, not domestic. >> what's your investment right now, howard? >> i think you saw them win a nice little piece of business from saudi arabia.
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that's exciting. their radar business is exciting. >> patrick, who do you like? >> right now i like lockheed martin the best. they have the highest dividend yield and the most aggressive share buy back. i think that's why investors are sharing the space. i'd stick with lockheed. i would throw nrk orthroh out there as well. stocks trading at five times. that one peaks my curiosity as well. >> all right. gentlemen, good to see you both. let's get to jackie deangelis. more earnings out. >> good afternoon. we are looking at the earnings right now. looks like we are in line in terms of the revenues. $1.63 billion. the eps was a four-cent beat, $2.34. also, the guidance for the next quarter, revenues to be up 4% to 5%. eps, 148, 149 range. also, the company raising its four-year guidance to $6.38.
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a tight range there, but the market definitely liking these numpls in the after hours session. we are up about 0.8%. michelle. >> nice move there. all right. thank you so much, jackie. the chairman and ceo of pbh is going to be with jim cramer on "mad money" tonight. don't miss it. >> we had the discussion on defense contractors. cash flow. >> yeah. >> to some degree. it's not a star wars character. rising above it. do house speaker john boehner's constituents think he's doing enough to reach a deal by the end of the year? also, who knew the fiscal cliff could have an impact on the take-home bundle of tomorrow night's powerball drawing? our wealth editor robert frank, plus a top financial adviser will tell you what you need to
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home state of ohio. what are his constituents saying about the situation? >> they're worried about it, michelle. the fiscal cliff is an abstraction to some degree here in washington. they're just behind me at the white house. representatives are meeting with white house officials now. in southwest ohio, john boehner's district north of cincinnati, a tip back into recession would bring very real economic pain. >> oh, i thought -- you did that so well, john. i thought you were leading up to a tape soof some kind. >> i was leelding ileading up f some kind, it's not rolling. >> you fooled them. representatives go back to their home states during a thanksgiving holiday. do you think they got an earful? get something done, compromise, do something, or stand your ground. what do you think the message was? >> yes, i do think they did.
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it's not a stand your ground message. somebody said the other day about the election that neither party got a mandate coming out of the election. what they got was a work order to get the job done. i think that's what john boehner's constituents are telling him. that's what all the other congressional leaders are hearing from their people. now, as a practical matter, that's very difficult because it's a very diverse country. you've got incredibly diverse and strongly held views on both sides. i do think the fact that voters have just spoken in an election and have sent a message that they want things to get done, that's a powerful propellant in washington to get things done, which is why we've seen behind me at the white house a parade of people going in to meet with secretary geithner, with the white house chief of staff, with the president. we have more coming tomorrow. lloyd blankfein of goldman sachs. this is an effort by everybody to try to marshall whatever
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influence these people have with lawmakers to try to get something done. >> okay, john. thank you. john harwood live from the white house. >> we look forward to seeing your home movies of ohio later, i guess. lottery players everywhere, reason up. did you know the dreaded fiscal cliff could impact if you win tomorrow night? we're going to tell you how to minimize financial pain from the fiscal cliff next. >> and later, you give us a minute and a half, and we're going to tell you what to watch out for tomorrow morning. stick with us. when we got marri. i had three kids. and she became the full time mother of three. it was soccer, and ballet, and cheerleading, and baseball. those years were crazy. so, as we go into this next phase, you know, a big part of it for us is that there isn't anything on the schedule.
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welcome back. powerball frenzy hitting the nation. if you're the winner, how can you make the most of a that fortune? wealth editor robert frank joins us with some advice. >> if you're going to win the lottery, it's best to do it before the fiscal pif. four pieces of advice were offered to the wirn. beating the cliff here is critical. first is tacks. winners can choose between a lump sum of $327 million or take
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annual payments. advisers say best to take the lump sum. the tax there would be $114 million before december 31st. if you wait until january 31st and we go off the cliff, that tax goes up to$130 million. you save $16 million by paying now. the winner should also make a gift. couples now can make a gift of up to $10 million tax free. next year that changes to only $2 million, and the tax rate on gifts also goes up. most important advice, a cooling off period. advisers say you should put the check in the bank and ignore it for three to six months. use that time to get your financial bearings and maybe create a real financial plan. and the plan is critical. you should hire a financial adviser and figure out your spending goals. michelle, $327 million sounds like a lot. once you buy a yacht and a g-650, pretty soon you're done. once you have a real income plan, you create a portfolio to meet those needs.
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it's probably going to be a mix of stocks, bonds, and alternatives. again, do it all before december 31st. along with the fiscal cliff, the stock cliff and of course the mansion cliff we now have the lottery cliff. michelle. >> all right. thank thank you, robert. >> we're going to take a closer look at how you can maximize your winnings from this lottery. we are doing this for michelle because she is going to win. >> and how to keep from falling victim. joining us is financial adviser of pepper international and robert frank. >> i always learned back in the day when we did a show about lottery winnings put it in the bank and keep it there as robert was saying so you can get used to the idea. you have to do things now to get ready for the fiscal cliff. >> the fiscal cliff is coming. you are very well advised to take the lump sum today. even before you do that it is important that you think about your security. for my wealthy families i manage
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a family office so that would include our lottery winner. we practice a stealth strategy. lifestyle, transitioning and humanity which is charity. all of those things are important. the first thing you should do if you win tomorrow is to not tell anyone. you don't want people to know. >> i have pondered this question. a lot of states require that you show up. it is very difficult to stay secret because they want a lot of publicity. what happens is if you are poor and you have a lot of friends and family who are poor they come to you for money. >> you can have a day or two before you show it. the first thing i advise people to do is contact a very reptutable security firm. they are going to make sure that you are relocated to a safe place. if you are not a celebrity
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already. >> you said security firm i thought you meant security like stocks. you mean security like people to protect you. >> that is important. you're our wealth editor. you know that security is a very important thing and people will find themselves in a whole different view of life if they win that kind of dough. >> that is the thing that is hard to get across. put the money aside and form a reasonable plan. we under estimate the shock to your life, your identity, your whole series of relationships with family and friends that in this case $300 million would bring. it is not easy to sort of walk someone through that plan because it is so shocking. that is why the most important thing is -- whoever wins this put it in the bank and try to ignore it for a while until you ed get your head on straight. >> tomorrow night is the next one. you have to do the various
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things for tax purposes ahead of the fiscal cliff. that is a lot of money. >> if you win it today you have a month. you can give the gifts right away. you can do the planning today and set up a charitable foundation before the end of the year to give away money to charity. there is a lot of things you can do today to beat the fiscal cliff. you are much better advised to take the lump sum. it is really important that you work with advisers who are used to handling the money you have. >> the new york city doorman who won the money and took the swedish girl to atlantic city was a bad idea. >> it will not last that long if we go down that route. >> thank you very much. >> if you can't buy a convertible and get a pretty girl what is the money for? >> my thought exactly. what are moving your investments first thing tomorrow morning?
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scott rind from wells fargo and kevin cumins for ubs. what are you expecting tomorrow? >> the two reports we have out new home sales and the fed's beige book are not going to do anything to move the market unless they were crazy out of expectations. everything is about the fiscal cliff negotiations. if we see headlines tomorrow we are going to see some market movement. if we don't the market is going to be dead. we want our clients in there buying stocks. we want them to commit money to the market now. we think the market will be higher into 2013. >> thank you. michael you're up next. what are you watching tomorrow? >> first of all as a proud notre dame alum i want to give congratulations to brian kelly. things focusing on for tomorrow
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the retail space. obviously with black friday and cyber monday yesterday a lot of focus on retail. we will get progress reports tomorrow morning. ann taylor and american eagle pretty bullish on both. probably one of our best cyber monday plays has been ebay. >> you got to praise notre dame and bad news you took up half your time. kevin. 30 seconds. >> we'll be focused on the new home sales report for october and the fed's beige book. new home sales on a month to month basis are very volatile. expectations are for little change but i wouldn't have too much conviction as to what move direction one way or another. home sales are up about 20% or so even if sales are flat. on the fed's beige book we expect more positive tone all be it conditioned by hurricane sandy. the timing of the cutoff is last
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monday. so it's unlikely to include any holiday shopping. >> thank you, guys. >> roll tide. >> thank you. >> i thought more people would be coming at us with the notre dame thing. >> where is mary thompson today? >> she is heading to miami for the big game. a down day and it was pretty clear that the markets were watching for signals coming out of washington on the fiscal cliff. and they didn't like what they heard when senate majority leader said he was disappointed with the talks with the republicans to this point. >> we have time. the moment harry reid started speaking you can see the charts that it all falls at the exact moment when he said they thought there would be more progress with the republicans.


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